If you’re too busy working on your own business idea, you may not have had a chance to scope out the competition. It's important to do this as a first step, as you could be missing out on some valuable lessons.
‘Know your competition’ is business 101, but you might be surprised by how many business owners either skimp on this process or neglect it entirely. Sure, the average business can count a few competitors on one hand. But it’s the successful ventures that go one step further and research what makes their competitors tick.
When you take your competition seriously, you can gain incredible insight into what others are doing right (and wrong), and use that knowledge to your advantage. If you don’t know what the competition is doing, you’ll never really know where you stand in the market and if your startup has legs.
Here are some ways to get a handle on the competition:
Identify your competitors
It may sound obvious, but lots of new businesses underestimate their competition because they either look too close to home, or only evaluate the market after they launch. Competition changes rapidly, businesses rebrand and some threats aren’t visible – you might be the only restaurant on the street, but potential customers could be ordering home delivery from a shop three suburbs away.
There are many ways to identify your competitors, including online searches, social media and word of mouth. If you want to go a step further, a SWOT analysis (strengths, weaknesses, opportunities and threats) is great for formalising your observations. The most important point is to never stop looking around. Gauge the current landscape for competitors, but always watch the horizon for newcomers.
Figure out what they’re doing right
The natural instinct is to look for what competitors are doing wrong, but there’s a more important question: what are they doing right? If it’s a longstanding business, there’s a reason they’ve stood the test of time. If they’re a newcomer, they might be doing things in a fresh way that you can learn from. The objective is to figure out why customers are in their store and what little tricks and incentives they’re using to keep customers coming back.
Part of this process is simply getting out and experiencing your competition firsthand before you start thinking about your business plans. Is there another cafe down the road that’s pulling in more customers during the morning rush? Head down for some competitive shopping. You might pick up ideas for your own venture (extra-attentive staff) or see an opportunity (hello, almond milk lattes). Also make note of any plans they have for the future – promotions, décor changes, menu adjustments. The more you know about their present and future strategies, the more you will set yourself up for success.
Act on your intel
Once you’ve gathered some competitive intelligence, draw up a list of what you’ve found, from customer service and pricing to website and marketing. If the competition is doing something well, figure out how you can take that idea and add value – the key being to innovate rather than imitate. Then consider what your competition is missing. Are there gaps in the market that you can fill? Give some thought to how you could exploit their deficiencies.
Lastly, don’t forget to give yourself credit for getting started. The very fact that you’re setting out to understand your competition gives you an immediate edge, and will enrich your business in the long run.